Israeli and Palestinian negotiators plan to meet Monday for the second time since re-starting the Middle East peace process, with the issue of Jewish settlements expected to dominate the talks.

Israel unveiled plans Sunday to build 740 new apartments in Israeli-occupied areas of East Jerusalem and the West Bank.

The Palestinians say settlement construction violates the 2003 Middle East road map peace plan, which calls on Israel to stop all settlement activity. The road map also calls on Palestinians to rein in militants.

The officials say the committee will consider whether to modify criteria to allow the release of prisoners with so-called "blood on their hands," a reference to attacks against Israelis.

Easing the criteria is seen as part of efforts to gain the release of Israeli soldier Corporal Gilad Shalit, who was captured by Gaza militants in June 2006.

Palestinian President Mahmoud Abbas is expected to meet with Israeli Prime Minister Ehud Olmert this week to follow up on last month's U.S.-sponsored peace conference. Israeli and Palestinian leaders pledged at the conference to negotiate with the goal of reaching a two-state settlement by the end of next year.

In a development Monday, medical sources in the Gaza Strip say an Israeli air strike killed two Palestinian militants and wounded another person.

The sources say the victims were members of the armed wing of the Islamic group Hamas, which seized control of the Gaza Strip in June after routing fighters from Palestinian President Mahmoud Abbas's Fatah group.

The Israeli attack came a day after the government rejected a ceasefire offer from Hamas.